<PAGE>
<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED DECEMBER 31, 1998
Commission File No. 0-20956
CENTRAL BANCORP, INC.
--------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
MASSACHUSETTS
- --------------------------------------------------------------
(State or Other Jurisdiction of Incorporation or Organization)
I.R.S. EMPLOYER IDENTIFICATION NO. 04-3447594
399 HIGHLAND AVENUE, SOMERVILLE, MA 02144
------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER
(617) 628-4000
--------------
Indicate by check mark whether the registrant (1) has filed all
reports required by Section 13 or 15(d) of the Securities and
Exchange Act of 1934 during the preceding twelve months (or for
such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes _____ No X (1)
-----
Class Outstanding at December 31, 1998
- ----------------------------- --------------------------------
Common Stock, $1.00 par value 1,967,000
(1) Registrant became registered under the Securities Exchange
Act of 1934 on January 8, 1999. The Registrant's
predecessor, Central Co-operative Bank was previously
registered with the Federal Deposit Insurance Corporation.
<PAGE>
<PAGE>
CENTRAL BANCORP, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
---------------------
Item 1. Financial Statements
Consolidated Statements of financial condition at
March 31, 1998 and December 31, 1998 (unaudited)
Consolidated Statements of Income for the three
months and nine months December 31, 1997 and 1998
(unaudited)
Consolidated Statements of Cash Flow for the nine
months ended December 31. 1998 and 1997 (unaudited)
Consolidated Statements of Changes in Stockholders'
Equity for the nine months ended December 31, 1998
and 1997 (unaudited)
Notes to Consolidated Financial Statements
(unaudited)
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
For the three and nine month periods ended December
31, 1998 and 1997
Item 3. Quantitative and Qualitative Disclosures about
Market Risk
PART II. OTHER INFORMATION
-----------------
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES<PAGE>
<PAGE>
Item 1-Financial Statements:
CENTRAL BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Financial Condition
<TABLE>
<CAPTION>
December 31, March 31,
(Dollars in Thousands) 1998 1998
- ----------------------------------------------------------------------------
<S> <C> <C>
ASSETS (Unaudited)
Cash and due from banks $ 4,247 $ 5,718
-------- --------
Investments available for sale:
Short-term investments 25,119 3,321
Investment securities 11,773 24,524
Mortgage-backed securities 33,396 45,182
Investments held to maturity:
Investment securities -- 4,000
Stock in Federal Home Loan Bank of Boston, at cost 3,350 3,150
The Co-operative Central Bank Reserve Fund 1,576 1,576
-------- --------
Total investments 75,214 81,753
-------- --------
Loans:
Mortgage loans 279,906 277,025
Other loans 5,386 4,699
-------- --------
285,292 281,724
Less allowance for loan losses (2,946) (2,886)
-------- --------
Net loans 282,346 278,838
-------- --------
Accrued interest receivable 1,588 1,910
Office properties and equipment, net 2,968 2,942
Deferred tax asset, net 1,384 1,286
Goodwill, net 3,168 3,384
Other assets 409 232
-------- --------
Total assets $371,324 $376,063
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $272,416 $276,364
Advances from Federal Home Loan Bank of Boston 57,000 59,000
Advance payments by borrowers for taxes and
insurance 1,481 1,229
Accrued interest payable 283 483
Accrued income taxes 376 1,053
Accrued expenses and other liabilities 1,616 1,148
-------- --------
Total liabilities 333,172 339,277
-------- --------
Commitments and Contingencies (Note 2)
Stockholders' equity:
Preferred stock $1.00 par value; authorized
5,000,000 shares; none issued or outstanding -- --
Common stock $1.00 par value; authorized
15,000,000 shares; issued and outstanding,
1,967,000 shares at December 31, 1998 and
1,965,000 shares at March 31, 1998 1,967 1,965
Additional paid-in capital 11,171 11,159
Retained income 25,275 23,841
Accumulated other comprehensive income (note 4) 399 544
Unearned compensation - ESOP (660) (723)
-------- --------
Total stockholders' equity 38,152 36,786
-------- --------
Total liabilities and stockholders' equity $371,324 $376,063
======== ========
</TABLE>
See accompanying notes to unaudited consolidated financial
statements. <PAGE>
<PAGE>
CENTRAL BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(In Thousands Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
---------------------- -------------------
1998 1997 1998 1997
---------- ---------- -------- --------
<S> <C> <C> <C> <C>
Interest and dividend income:
Mortgage loans $5,329 $4,954 $16,154 $14,102
Other loans 103 112 304 339
Short-term investments 202 45 384 215
Investment securities 466 757 1,253 1,958
Mortgage-backed securities 497 712 1,665 1,933
The Co-operative Central Bank
Reserve Fund 22 22 71 73
------ ------ ------- -------
Total interest and dividend
income 6,619 6,602 19,831 18,620
------ ------ ------- -------
Interest expense:
Deposits 2,696 2,871 8,352 8,254
Advances from Federal Home Loan
Bank of Boston 825 690 2,518 1,663
------ ------ ------- -------
Total interest expense 3,521 3,561 10,870 9,917
------ ------ ------- -------
Net interest and dividend income 3,098 3,041 8,961 8,703
Provision for loan losses -- -- -- --
------ ------ ------- -------
Net interest and dividend income
after provision for loan losses 3,098 3,041 8,961 8,703
------ ------ ------- -------
Non-interest income:
Deposit service charges 118 142 331 374
Net gains from sales of investment
securities 177 2 361 346
Other income 63 60 185 205
------ ------ ------- -------
Total non-interest income 358 204 877 925
------ ------ ------- -------
Operating expenses:
Salaries and employee benefits 1,120 1,079 3,291 3,223
Occupancy and equipment 390 292 1,027 910
Data processing service fees 152 86 423 273
Professional fees 218 227 581 556
Foreclosure expenses, net -- -- -- 2
Goodwill amortization 72 72 216 216
Other expense 379 400 1,114 1,146
------ ------ ------- -------
Total operating expenses 2,331 2,156 6,652 6,326
------ ------ ------- -------
Income before income taxes 1,125 1,089 3,186 3,302
Income tax expense 454 426 1,280 1,288
------ ------ ------- -------
Net income $ 671 $ 663 $ 1,906 $ 2,014
------ ------ ------- -------
Earnings per common share $ 0.35 $ 0.34 $ 0.98 $ 1.04
====== ====== ======= =======
Earnings per common share, diluted $ 0.35 $ 0.34 $ 0.98 $ 1.04
====== ====== ======= =======
Weighted average common shares
outstanding 1,938 1,937 1,937 1,937
Weighted average common shares
outstanding, diluted 1,942 1,950 1,947 1,946
</TABLE>
See accompanying notes to unaudited consolidated financial
statements. <PAGE>
<PAGE>
CENTRAL BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
December 31,
(In Thousands) 1998 1997
- ------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,906 $ 2,014
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 474 350
Amortization of premiums, fees and discounts 228 161
Amortization of goodwill 216 216
Net gains from sales of investment securities (361) (346)
Proceeds from sales of loans -- 193
Proceeds from sales of real estate acquired by foreclosure -- 141
Decrease(increase) in accrued interest receivable 322 (42)
(Increase)decrease in other assets (177) 215
Increase(decrease) in advance payments by borrowers for taxes
and insurance 252 (75)
(Decrease)increase in accrued interest payable (200) 133
Decrease in accrued income taxes (677) (362)
Increase(decrease) in accrued expenses and other liabilities 468 (84)
-------- --------
Net cash provided by operating activities 2,451 2,514
-------- --------
Cash flows from investing activities:
Principal collected on loans 89,696 40,471
Loan originations (93,431) (71,726)
Purchase of mortgage-backed securities available for sale -- (29,528)
Principal payments on mortgage-backed securities
available for sale 11,692 8,529
Purchase of investment securities available for sale (1,534) (1,186)
Maturities of investment securities available for sale 13,100 6,300
Proceeds from sales of investment securities available
for sale 1,396 1,136
Maturities of investment securities held to maturity 4,000 --
Net (increase)decrease in short-term investments (21,798) 2,861
Purchase of Stock in Federal Home Loan Bank of Boston (200) (215)
Purchase of office properties and equipment (500) (465)
-------- --------
Net cash used by investing activities 2,421 (43,823)
-------- --------
Cash flows from financing activities:
Net (decrease)increase in deposits (3,948) 18,050
Proceeds from advances from FHLB of Boston 43,000 69,970
Payments on advances from FHLB of Boston (45,000) (44,000)
Proceeds from exercise of stock options 14 --
Payments of dividends on common stock (472) (472)
Amortization of unearned compensation - ESOP 63 120
-------- --------
Net cash provided by financing activities (6,343) 43,668
-------- --------
Net (decrease)increase in cash and due from banks (1,471) 2,359
Cash and due from banks at beginning of period 5,718 3,995
-------- --------
Cash and due from banks at end of period $ 4,247 $ 6,354
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 11,069 $ 9,784
Income taxes 1,956 1,650
Schedule of noncash investing activities:
Transfer of mortgage loans to real estate acquired
by foreclosure -- 128
</TABLE>
See accompanying notes to unaudited consolidated financial
statements.
<PAGE>
<PAGE>
CENTRAL BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity
(Unaudited)
<TABLE>
<CAPTION>
Accumulated
Additional Other Unearned Total
Common Paid-in Retained Comprehensive Compensation Stockholders'
(In Thousands) Stock Capital Income Income ESOP Equity
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Nine Months Ended December 31, 1997
- -----------------------------------
Balance at March 31, 1997 $1,965 $11,159 $21,423 $ (156) $ (846) $33,545
-------------------------------------------------------------------
Net income -- -- 2,014 -- -- 2,014
Other comprehensive income, net of tax:
Unrealized gains(losses) on securities,
net of reclassification adjustment
(note 4) -- -- -- 852 -- 852
-------
Comprehensive income 2,866
=======
Dividends paid -- -- (472) -- -- (472)
Amortization of unearned compensation - ESOP -- -- -- -- 120 120
-------------------------------------------------------------------
Balance at December 31, 1997 $1,965 $11,159 $22,965 $ 696 $ (726) $36,059
===================================================================
Nine Months Ended December 31, 1998
Balance at March 31, 1998 $1,965 $11,159 $23,841 $ 544 $ (723) $36,786
-------------------------------------------------------------------
Net income -- -- 1,906 -- -- 1,906
Other comprehensive loss, net of tax:
Unrealized gains(losses) on securities,
net of reclassification adjustment
(note 4) -- -- -- (145) -- (145)
-------
Comprehensive income 1,761
-------
Proceeds from exercise of stock options 2 12 -- -- -- 14
Dividends paid -- -- (472) -- -- (472)
Amortization of unearned compensation - ESOP -- -- -- -- 63 63
-------------------------------------------------------------------
Balance at December 31, 1998 $1,967 $11,171 $25,275 $ 399 $ (660) $38,152
===================================================================
</TABLE>
See accompanying notes to unaudited consolidated financial
statements.
<PAGE>
<PAGE>
CENTRAL BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
---------------------
On January 8, 1999, the Registrant, Central Bancorp, Inc.
became the holding company of Central Co-operative Bank
("Central Bank" or "Bank") when the Bank completed its
holding company reorganization.. Because the
reorganization was completed after December 31, 1998, the
discussion in this form 10Q relates solely to the
operations of the Bank. For more information, see
"Management's Discussion and Analysis of Financial
Condition and Results of Operations Holding Company".
The consolidated financial statements of Central Co-
Operative Bank and Subsidiary presented herein reflect the
operations of Central Co-operative Bank and its subsidiary
Central Securities Corporation, a Massachusetts security
corporation, which began operations April 1, 1998. The
information in this report should be read in conjunction
with the financial statements of the Bank as of and for
the year ended March 31, 1998, included in the Bank's
Annual Report on Form 10-K. In the opinion of management,
the accompanying unaudited consolidated financial
statements reflect all adjustments, consisting of normal
recurring adjustments, necessary to fairly present the
results for the interim periods presented. Interim
results are not necessarily indicative of results to be
expected for the entire year.
(2) FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
-------------------------------------------------
Commitments to originate loans, unused lines of credit and
unadvanced portions of construction loans are agreements
to lend to a customer, provided there is no violation of
any condition established in the contract. Commitments
generally have fixed expiration dates or other termination
clauses and may require payment of a fee. Since many of
the commitments may expire without being drawn upon, the
total commitment amounts do not necessarily represent
future cash requirements. The Bank evaluates each
customer's credit worthiness on a case-by-case basis. The
amount of collateral obtained, if deemed necessary by the
Bank upon extension of credit, is based on management's
credit evaluation of the borrower.
Commitments at December 31, 1998 follow:
Unused lines of credit.............................. $17,974,000
Unadvanced portions of construction loans........... 1,640,000
Commitments to originate residential mortgage loans:
Fixed rate........................... 4,765,000
Adjustable rate...................... 2,855,000
<PAGE>
<PAGE>
CENTRAL BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(3) INCOME TAXES
------------
The Bank accounts for income taxes using the asset and
liability tax method. Deferred tax assets and liabilities
are established for the temporary differences between the
financial reporting basis and the tax basis of the Bank's
assets and liabilities at enacted tax rates expected to be
in effect when such amounts are realized or settled.
(4) REPORTING COMPREHENSIVE INCOME
------------------------------
Effective April 1, 1998, the Bank adopted Statement of
Financial Accounting Standards ("SFAS") No. 130,
"Reporting Comprehensive Income". SFAS 130 establishes
standards for reporting and displaying comprehensive
income, which is defined as all changes to equity except
investments by, and distributions to, shareholders. Net
income is a component of comprehensive income, with all
other components referred to in the aggregate as other
comprehensive income.
The Bank's other comprehensive income and related tax effect
is as follows:
<TABLE>
<CAPTION>
For the Nine Months Ended
(In Thousands) December 31, 1997
- ----------------------------------------------------------------------------------
Before-
Tax Tax After-Tax
Amount Expense Amount
<S> <C> <C> <C>
Unrealized gains on securities
Unrealized holding gains arising during
period $1,742 $679 $1,063
Less: reclassification adjustment for
gains realized in net income 346 135 211
------------------------------
Other comprehensive income $1,396 $544 $ 852
==============================
For the Nine Months Ended
(In Thousands) December 31, 1998
- ----------------------------------------------------------------------------------
Before- Tax
Tax (Benefit) After-Tax
Amount Expense Amount
Unrealized gains on securities
Unrealized holding gains arising during
period $ 120 $ 48 $ 72
Less: reclassification adjustment for
gains realized in net income 361 144 217
------------------------------
Other comprehensive loss $ (241) $ (96) $(145)
==============================
</TABLE>
<PAGE>
<PAGE>
CENTRAL BANCORP, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
General:
- -------
On January 8, 1999, the Registrant, Central Bancorp, Inc.
became the holding company of Central Co-operative Bank when
the Bank completed its holding company reorganization.
Because the reorganization was completed after December 31,
1998, the discussion in this form 10-Q relates solely to the
operations of the Bank. For more information, "Holding
Company".
Net income amounted to $671,000, or $0.35 per diluted share
for the three months ended December 31, 1998 as compared to
net income of $663,000, or $0.34 per diluted share in the
corresponding quarter ended December 31, 1997.
Net income for the current quarter was higher than net income
for the same fiscal 1998 period primarily due to an increase
in net interest income, an increase in net gains from the
sale of investment securities and partially offset by an
increase in operating expenses.
Year 2000:
The Bank has formed a committee with members from all
departments of the Bank to address year 2000 readiness. The
committed has developed a plan to address this and related
issues. The components of the Bank's plan focus on; software
and hardware utilized by the Bank, communication equipment
and other equipment and facilities utilized by the Bank,
including security and environmental systems. Additionally,
the plan includes analysis of other risks posed by this issue
such as liquidity, cash requirements, credit risk, supplier
risk, borrower readiness, etc.
Each component of the Bank's plan has been evaluated to
determine if it is currently year 2000 compliant or whether
there needs to be any replacement or remediation.
The Bank is utilizing both internal and external resources to
test for year 2000 compliance. The testing and necessary
changes to all critical systems are expected to be complete
during the current fiscal year at an estimated external cost
between $50,000 and $100,000. Included in the estimated cost
are such things as third party proxy and other testing of
critical systems, customer awareness programs, any necessary
new equipment or upgrades, and other contingencies that may
arise. To date the Bank has recorded external costs amounting
to approximately $35,000. This total does not include
internal costs relating to Year 2000 issues, which are not
readily determinable,
The costs of the year 2000 project and the date on which the
Bank plans to complete any necessary modifications are based
upon management's best estimates, which were derived
utilizing numerous assumptions. However, there can be no
guarantee that these estimates will be achieved and actual
results could differ materially from those plans.
Third party service bureaus provide the majority of the
material data processing of the Bank that could be affected
by this problem. During the first quarter of fiscal 1999,
the Bank converted its data processing to a service provider
that has represented to the Bank that it is year 2000
compliant. The Bank has begun testing this
<PAGE>
<PAGE>
representation, primarily through the use of proxy testing,
and such testing is expected to be completed during the
fiscal year ending March 31, 1999. Testing of substantially
all of the other components of the Bank's plan is also
expected to be completed by March 31, 1999.
The Bank has initiated an extensive education and
investigation program with regard to the borrowers of the
Bank. This effort has been directed at determining the level
of risk to the Bank in the loan portfolio from the failure of
borrowers that encounter business problems relating to year
2000 compliance. This process has included questionnaires
and interviews with large borrowers to try to assess this
risk. To date no additional loan loss provision has been
deemed necessary. However, this is an ongoing process and
will be evaluated at least quarterly for as long as
necessary.
The Bank has prepared a contingency plan of action to address
any business interruption problem arising with regard to year
2000. This is a dynamic plan and will be updated as
necessary as deemed appropriate by management. Since our
data processing service provider has represented that they
are year 2000 compliant, the plan includes operating in an
off-line mode if the compliance testing of our supplier fails
and is not corrected. Additionally, the plan includes
operating alternatives such as the use of paper based records
and forms, alternative power sources and cellular telephones
should there be a failure of any critical services utilized
by the Bank such as electricity or telephone services.
The Bank presently also believes that, based on current
information, the year 2000 problem will not pose significant
operational problems for the Bank. However, the majority of
any modifications, if required, are beyond the direct control
of the Bank because the Bank's third party data processing
vendor must make them. Therefore, if any required
modifications are not completed in a timely manner, the year
2000 problem may have a material adverse impact on the
operations of the Bank.
HOLDING COMPANY:
- ---------------
A special meeting of Stockholders of the Bank was held on
Thursday, November 19, 1998 and approved the formation of a
holding company. The reorganization was completed as of
January 8, 1999. Under the plan, each existing share of the
Bank's common stock was converted into one share of common
stock in the new holding company, Central Bancorp, Inc. As
a result of this reorganization, the Bank's stockholders
became owners of the newly formed holding company, Central
Bancorp, Inc., which in turn owns all of the outstanding
stock of the Bank.
The reorganization was accounted for in a manner
substantially similar to a pooling of interests. Costs
incurred in the Reorganization, which are expected to total
approximately $250,000, have initially been capitalized as
organization costs of the Holding Company and are being
amortized over a five-year period. However, for fiscal
years beginning after December 15, 1998, the Accounting
Standards Executive Committee of the American Institute of
Certified Public Accountants has issued Statement of
Position 98-5, Reporting of the Costs of Start-up
Activities, which will require a change in accounting method
for such start-up costs. As of April 1, 1999, any remaining
unamortized costs incurred in the Reorganization must be
written-off and reported as a cumulative effect of a change
in accounting principle.
FINANCIAL CONDITION:
- -------------------
The following is a discussion of the major changes and
trends in financial condition from the end of the preceding
fiscal year, March 31, 1998, to December 31, 1998.
<PAGE>
Total assets decreased from $376.1 million at March 31, 1998
to $371.3 million at December 31, 1998 primarily as a result
of a decline in total investments, offset in part by
increases in the Bank's loan portfolio and short term
investments.
The Bank's loan balance grew by $3.5 million or 1.3% as a
result of loan originations amounting to $93.4 million,
$73.1 million of which were in residential real estate
loans. Loan amortization and pay-offs amounted to
approximately $89.7 million. The Bank's investment
portfolio decreased by $6.5 million, primarily as a result
of approximately $11.7 million in paydowns of
mortgage-backed securities and approximately $18.5 million
of maturities, calls and sales of investment securities.
These reductions in the investment portfolio were partly
offset by an increase in short-term investments amounting to
approximately $21.8 million. Deposits declined during the
nine month period by $3.9 million while advances from the
FHLB of Boston decreased by $2.0 million. The funds
received by the decrease in investments were used to fund
the increase in loans and the decrease in deposits and FHLB
advances.
NON-PERFORMING ASSETS:
- ---------------------
The Bank had non-accruing loans totaling $110,000 at
December 31, 1998, a decrease of $247,000 or 69% from
$357,000 on March 31, 1998; Interest income not recognized
on non-accruing loans amounted to approximately $3,000 for
the first nine months of fiscal 1999.
The following table sets forth information with respect to
the Bank's non-performing assets for the dates indicated:
<TABLE>
<CAPTION>
December 31 March 31 December 31
1998 1998 1997
---- ---- ----
(Dollars in thousands)
<S> <C> <C> <C>
Loans accounted for on a
non-accrual basis, (non-accruing loans) $ 110 $ 357 $ 239
Impaired loans, accruing 1,291 1,306 1,311
Non-accruing loans as a percentage of
total loans 0.04% 0.13% 0.09%
Non-accruing loans as a percentage of
total assets 0.03% 0.09% 0.07%
</TABLE>
The Bank's non-accruing loans continue to decrease due to
the continued improvement in the real estate market. When
compared to the balance at December 31, 1997, non-accruing
loans decreased by $129,000.<PAGE>
<PAGE>
RESULTS OF OPERATIONS - THREE MONTHS ENDED DECEMBER 31, 1998,
- ------------------------------------------------------------
AND 1997:
- ---------
Net income for the three months ended December 31, 1998,
and 1997, amounted to $671,000 or $0.35 per diluted share
and $663,000 or $0.34 per diluted share, respectively.
Average earning assets increased by $14.7 million while
the rate earned on these assets decreased 29 basis points
to 7.27% during the third quarter of fiscal 1999 when
compared to the third quarter of fiscal 1998. The average
balance of interest-bearing liabilities increased $13.0
million while the rates paid on these liabilities
decreased by 21 basis points during the quarter ended
December 31, 1998 when compared to the same period one
year ago. Together these developments resulted in a
$17,000 increase in interest and dividend income and a
corresponding decrease of $40,000 in interest expense. The
combination resulted in a $57,000 increase in net interest
and dividend income from the fiscal 1998 quarter to the
fiscal 1999 quarter.
Interest income from the Bank's loan portfolio
increased $366,000 in the third quarter of fiscal 1999.
This increase was primarily the result of a $35.0 million
increase in the average loan balance and partly offset by
a 44 basis point decrease in average rates earned on these
loans.
Income from the Bank's investment portfolio (which
includes short term investments, investments and mortgage
backed securities) decreased by $349,000 during the third
quarter of fiscal 1999 when compared to the same fiscal
1998 period. The yield on these assets decreased by 6
basis points while the average balance decreased by $20.2
million during the fiscal 1999 quarter.
The Bank's cost of funds decreased by $40,000 during the
third quarter of fiscal 1999 when compared to the same
fiscal 1998 quarter. Total interest expense on deposits
decreased $176,000 during the third quarter of fiscal 1999
when compared to the third quarter of fiscal 1998. The
rate paid on deposits decreased 25 basis points from 4.14%
during the quarter ended December 31, 1997 to 3.89% during
the quarter ended December 31, 1998. The average balance
of these deposits decreased $387,000 to $275.0 million
during the third quarter of fiscal 1999 from $275.4
million during the fiscal 1998 third quarter.
The average balance of borrowed funds increased by $13.4
million to $60.2 million in the fiscal 1999 third quarter
compared to $46.8 million in the same fiscal 1998 quarter.
The rate paid on borrowings decreased by 37 basis points
in the fiscal 1999 quarter to 5.48% from 5.85% in the
fiscal 1998 quarter. The combined effect of these changes
resulted in an increase of $135,000 in interest expense on
borrowings to $825,000 in the third quarter of fiscal 1999
compared to $690,000 in fiscal 1998's third quarter.
The provision for loan losses is made to maintain the
allowance for loan losses at a level which management
considers adequate to provide for probable losses based on
an evaluation of known and inherent risks in the loan
portfolio. Consistent with the current evaluation of the
loan portfolio, the Bank did not make any provision for
the third quarter of fiscal 1999 or fiscal 1998.
Non-interest income increased by approximately $154,000 to
$358,000 in the third quarter of fiscal 1999 from $204,000
in the third fiscal 1998 quarter. The Bank recorded
$177,000 and $2,000 in net gains from sales of investment
securities during the third quarter of fiscal 1999 and
fiscal 1998, respectively. This $175,000 increase in net
gains from the sale of investment securities is the
primary reason for the increase in non-interest income
between the two quarters.
Operating expenses increased $175,000 in the third quarter
of fiscal 1999 compared to the same quarter of fiscal
1998. The Bank incurred certain costs and added equipment
as a result of a conversion of the Bank's data
<PAGE>
<PAGE>
processing servicer and as a result of higher data
processing service fees and depreciation expenses which
were recorded during the current fiscal 1999 quarter.
The provision for Federal and state income taxes amounted
to $454,000 and $426,000 during the third quarter of
fiscal 1999 and fiscal 1998, respectively. The increased
expense relates primarily to the increased level of pre-
tax income.
RESULTS OF OPERATIONS - NINE MONTHS ENDED DECEMBER 31, 1998 AND
- ---------------------------------------------------------------
1997:
- ----
Net income for the nine months ended December 31, 1998 and
1997 amounted to $1.9 million or $0.98 per diluted share
and $2.0 million or $1.04 per diluted share, respectively.
The average balance of earning assets increased by $33.3
million during the first nine months of fiscal 1999 above
the level of fiscal 1998's first nine months. The rate
earned on these assets decreased by 24 basis points. The
average balance of interest-bearing liabilities increased
$30.8 million and the rates paid on these liabilities
decreased by 2 basis points during the nine months ended
December 31, 1998 when compared to the same period one
year ago. The combination of these developments resulted
in a $1.2 million increase in total interest and dividend
income and a $953,000 increase in total interest expense
which caused net interest and dividend income to increase
by $258,000 in the first nine months of fiscal 1999 from
the same fiscal 1998 nine months.
Total interest and dividend income in the nine months
ended December 31, 1998 amounted to $19.8 million compared
to $18.6 million in the first nine months of fiscal 1998.
The increase resulted from an increase in the average
balance of interest-earning assets from $332.4 million in
the first nine months of fiscal 1998 to $365.8 million in
the first nine months of fiscal 1999. The yield on
interest-earning assets decreased by 24 basis points to
7.23% in the first nine months of fiscal 1999 from 7.47%
in the comparable fiscal 1998 period.
The increase of $2.0 million in interest income from the
Bank's loan portfolio during the first nine months of
fiscal 1999, was primarily the result of a $46.7 million
increase in the average loan balance partly offset by a
reduction of 35 basis points in the average rates earned
on these loans from 7.94% during the fiscal 1998 first
nine months to 7.59% during the current nine month period.
Interest and dividend income from the Bank's investment
portfolio decreased by $806,000 during the first nine
months of fiscal 1999 when compared to the same fiscal
1998 period. The decrease in income was primarily a
result of the average balance decreasing by $13.4 million
coupled with a 33 basis points yield decrease during the
fiscal 1999 nine months.
Total interest expense rose by $953,000 during the first
nine months of fiscal 1999 when compared to the same
fiscal 1998 nine month period. Interest expense on
deposits increased by $98,000 during the nine months ended
December 31, 1998 when compared to fiscal 1998's first
nine months. The rate paid on deposits decreased 7 basis
points from 4.08% to 4.01% while the average balance of
these deposits also increased $8.0 million to $276.5
million from $268.5 million during the first nine months
of fiscal 1999 when compared to fiscal 1998's first nine
months.
The average balance of borrowed funds increased by $22.8
million to $60.6 million in the fiscal 1999 first nine
months compared to $37.8 million in the same fiscal 1998
nine months. The rate paid on borrowings decreased by 34
basis points in the fiscal 1999 nine months to 5.51% from
5.85% in fiscal 1998. The combined effect of these
changes resulted in interest expense on borrowings
increasing $855,000 to $2.5 million in the first nine
months of fiscal 1999 compared to $1.7 million during the
nine months ended December 31, 1997.
<PAGE>
<PAGE>
The provision for loan losses is made to maintain the
allowance for loan losses at a level which management
considers adequate to provide for potential losses based
on an evaluation of known and inherent risks in the loan
portfolio. Consistent with the current evaluation of the
loan portfolio, the Bank did not provide any provision for
the first nine months of fiscal 1999 and fiscal 1998.
Non-interest income decreased $48,000 to $877,000 in the
fiscal 1999 nine month period from $925,000 in fiscal 1998
first nine months. During the first nine months of
fiscal 1999, the Bank realized gains from sales of
investment securities amounting to $361,000 compared to
gains amounting to $346,000 during the first nine months
of fiscal 1998.
Operating expenses increased $326,000 in the first nine
months of fiscal 1999. Occupancy and Equipment and Data
processing service fees increased by $117,000 and
$150,000, respectively, relating primarily to the
conversion of the Bank's data processing servicer during
the fiscal 1999 period.
The provision for Federal and state income taxes amounted
to $1,280,000 and $1,288,000 during the first nine months
of fiscal 1999 and fiscal 1998, respectively. The
decreased expense relates primarily to the decreased level
of pre-tax income.
LIQUIDITY AND CAPITAL RESOURCES:
- -------------------------------
The Bank's principal sources of liquidity are loan
amortization, loan prepayments, increases in deposits and
advances from The Federal Home Loan Bank (FHLB) of Boston.
The Bank is a voluntary member of the FHLB of Boston and
as such is generally entitled to borrow up to 30% of its
total assets. Cash from these liquidity sources is used
to fund loan originations, security investments, deposit
maturities and repayment of FHLB of Boston advances. The
Bank's capital to assets ratio was 10.27% on December 31,
1998, which exceeded regulatory requirements.
NEW ACCOUNTING PRONOUNCEMENTS:
- -----------------------------
In June 1998, the FASB issued SFAS No. 133, "Accounting
for Derivative Instruments and Hedging Activities." SFAS
133 establishes accounting and reporting standards for
derivative instruments, including certain derivative
instruments embedded in other contracts, (collectively
referred to as derivatives) and for hedging activities.
It requires that an entity recognize all derivatives as
either assets or liabilities in the statement of financial
position and measure those instruments at fair value. If
certain conditions are met, a derivative may be
specifically designated as (a) a hedge of the exposure to
changes in the fair value of a recognized asset or
liability or an unrecognized firm commitment, (b) a hedge
of the exposure to variable cash flows of a forecasted
transaction, or (c) a hedge of the foreign currency
exposure of a net investment in a foreign operation, an
unrecognized firm commitment, an available-for-sale
security, or a foreign-currency-denominated forecasted
transaction.
The accounting for changes in the fair value of a
derivative (that is gains and losses) depends on the
intended use of the derivative and the resulting
designation. This statement is effective for the Bank's
fiscal year beginning April 1, 2000. The Bank does not
expect this statement to have a material effect on its
consolidated financial statements.
<PAGE>
<PAGE>
Quantitative and Qualitative Disclosures About Market Risk
- ----------------------------------------------------------
The Bank has experienced no material changes in market risk
since March 31, 1998. Information regarding market risk at
March 31, 1998 follows:
The Bank's earnings are largely dependent on its net interest
income which is the difference between the yield on interest-
earning assets and the cost of interest-bearing liabilities.
The bank seeks to reduce its exposure to changes in interest
rate, or market risk, through active monitoring and
management of its interest rate risk exposure. The policies
and procedures for managing both on and off balance sheet
activities are established by the bank's asset/liability
management committee(ALCO). The Board of directors reviews
and approves the ALCO policy annually and monitors related
activities on an ongoing basis.
Market risk is the risk of loss from adverse changes in
market prices and rates. The Bank's market risk arises
primarily from interest rate risk inherent in its lending and
deposit taking activities.
The main objective in managing interest rate risk is to
minimize the adverse impact of changes in interest rates on
the Bank's net interest income and preserve capital, while
adjusting the Bank's asset/liability structure to control
interest rate risk. However, a sudden and substantial
increase in interest rates may adversely impact earnings to
the extent that the interest rates borne by assets and
liabilities do not change at the same speed, to the same
extent, or on the same basis.
The following two tables reflect different methods of
disclosing the Bank's exposure to a change in interest rates
and its potential impact on the Bank's net interest income.
The gap analysis uses contractual maturates and next
repricing dates while the market risk uses estimated
prepayments and excludes the next repricing dates. The
interest rate sensitivity of the Bank's assets and
liabilities in both tables would vary substantially if
different assumptions were used or if actual experience
differs from the assumptions provided.
One method used to measure the interest rate risk exposure is
the Bank's gap analysis, which involves comparing the
difference between assets and liabilities that mature or
reprice during a given period of time. These differences are
a primary component of the risk to net interest income. A
gap is considered positive when the amount of interest-
sensitive assets exceeds the amount of interest-sensitive
liabilities, and is considered negative when the amount of
interest-sensitive liabilities exceeds the amount of
interest-sensitive assets.
At March 31, 1998, interest-sensitive liabilities exceeded
interest-sensitive assets (maturing or repricing within one
year) by $46.7 million, with the ratio of interest-sensitive
assets to interest-sensitive liabilities at 72.9%. At March
31, 1997, the Bank's interest-sensitive liabilities exceeded
interest-sensitive assets (maturing or repricing within one
year) by $78.8 million, with the ratio of interest-sensitive
assets to interest-sensitive liabilities at 55.9%. Under
normal business conditions, the Bank's net interest income
would be unfavorably affected by a trend of rising interest
rates and, alternatively, in a falling interest rate
environment, the Bank's net interest income would be
favorably affected. The larger amount of interest-sensitive
liabilities (deposits and borrowings) would adjust more
quickly to falling interest rates than the Bank's interest-
sensitive assets (loans and investments). Investments, which
traditionally are easily saleable compared to individual
loans, made up 22.1% of interest-sensitive assets at March
31, 1998, compared to 24.2% of interest-sensitive assets at
March 31, 1997.
The following table sets forth maturity and repricing
information concerning the Bank's interest-sensitive assets
and liabilities at March 31, 1998. The table does not
reflect partial or full prepayment of loans or mortgage-
backed securities prior to contractual maturity.:
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
(Dollars In Time Interval from March 31, 1998
Thousands)
- ---------------------------------------------------------------------------------------------------------------
0-30 31-90 91-180 181-365 1-3 3-5
Days Days Days Days Years Years Thereafter Total
---- ----- ------ ------- ----- ----- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-sensitive assets
Short-term investments $ 3,321 $ -- $ -- $ -- $ -- $ -- $ -- $ 3,321
Investment securities (including
stock in the Federal Home Loan
Bank of Boston) 5,026 3,150 3,001 9,000 4,513 3,996 2,988 31,674
Adjustable-rate loans (a) 21,116 4,618 7,708 16,951 48,588 67,330 35,783 202,094
Fixed-rate loan amortization (b) 17,357 320 537 1,728 7,422 7,689 44,577 79,630
Mortgage-backed securities
amortization (b) 7,327 1,957 20,233 694 3,021 1,498 10,452 45,182
The Co-Operative Central Bank
Reserve Fund -- -- 1,576 -- -- -- -- 1,576
--------------------------------------------------------------------------
Total interest-sensitive
assets 54,147 10,045 33,055 28,373 63,544 80,513 93,800 363,477
--------------------------------------------------------------------------
Interest-sensitive liabilities
NOW accounts (c) 6,791 -- -- -- -- -- 20,372 27,163
Regular, club, and 90-day notice
accounts (c) 14,646 56 -- -- -- -- 43,769 58,471
Money market deposit accounts 22,317 -- -- -- -- -- -- 22,317
Term deposit certificates 8,262 19,666 43,851 30,741 47,387 3,759 -- 153,666
Advances from FHLB of Boston 10,000 9,000 6,000 1,000 3,000 16,000 14,000 59,000
--------------------------------------------------------------------------
Total interest-sensitive
liabilities 62,016 28,722 49,851 31,741 50,387 19,759 78,141 320,617
--------------------------------------------------------------------------
Interest-sensitivity gap
(assets minus liabilities) ($7,869)($18,677)($16,796) ($3,368) $13,157 $60,754 $15,659 $ 42,860
==========================================================================
Cumulative gap ($7,869)($26,546)($43,342)($46,710) ($33,553) $27,201 $42,860
===============================================================
Cumulative interest-sensitive assets
as a percent of cumulative
interest-sensitive liabilities 87.3% 70.7% 69.2% 72.9% 84.9% 111.2% 113.4%
Cumulative gap as a percent of
total assets ($376,063) -2.1% -7.1% -11.5% -12.4% -8.9% 7.2% 11.4%
<FN>
____________
(a) Adjustable-rate mortgage loan amounts and other loans subject to repricing are accumulated as if the entire
balance came due on the repricing date.
(b) Amortization is shown in the time period corresponding to the contractual amortization or, when such
information was not available, the computed principal amortization based on weighted average maturities and
weighted average rates. Fixed-rate demand loans are shown in the "0-30 Days" category and are usually
amortized over longer periods and can be repriced at the option of the Bank.
(c) Although NOW and regular accounts are subject to immediate withdrawal and repricing, management considers
these accounts to have significantly longer effective maturities and repricing terms; therefore, the
majority of such accounts have been included in the "Thereafter" category. If NOW and regular accounts had
been assumed to be subject to repricing within one year, the cumulative excess of interest-sensitive
liabilities over interest-sensitive assets would have been $110,851 or 53.1% of total assets.
</FN>
</TABLE>
<PAGE>
<PAGE>
The other method used to measure interest rate risk is the
market risk analysis. The following table shows the Bank's
financial instruments that are sensitive to changes in interest
rates, categorized by estimated prepayments, contractual
maturity and the instruments' fair values at March 31, 1998.
While we cannot predict future interest rates or their effects
on our net interest income, we do not expect current interest
rates to have a material adverse effect on our net interest
income in the future. Computations of prospective effects of
hypothetical interest rate changes are based on numerous
assumptions, including relative levels of market interest rates,
prepayments and deposit run-offs, and should not be relied upon
as indicative of actual results. Certain shortcomings are
inherent in such computations. Although certain assets and
liabilities may have similar maturity or periods of repricing
they may react at different times and in different degrees to
changes in the market interest rates. The interest rates on
certain types of assets and liabilities may fluctuate in advance
of changes in market interest rates, while rates on other types
of assets and liabilities may lag behind changes in market
rates. Certain assets, such as adjustable rate mortgage loans,
generally have features which restrict changes in interest rates
on a short term basis and over the life of the asset. In the
event of a change in interest rates, prepayments and early
withdrawal levels could deviate significantly from those assumed
in making the calculations set forth above. Additionally, an
increased credit risk may result as the ability of many
borrowers to service their debt may decrease in the event of an
interest rate increase.<PAGE>
<PAGE>
<TABLE>
<CAPTION>
(Dollars In Thousands) Expected Maturity at March 31, 1998
- ------------------------------------------------------------------------------------------------------------
One One Year Two Years Three Years Four Years
Year to Two to Three to Four to Five
or Less Years Years Years Years Thereafter Total Fair Value
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-sensitive assets
Residential mortgage loans
Fixed rate
Amount $ 4,933 $ 5,088 $ 3,934 $ 2,533 $ 2,442 $ 29,564 $ 48,494 $ 52,905
Average rate 7.8% 7.7% 7.8% 7.7% 7.7% 7.4% 7.5%
Adjustable rate
Amount $12,979 $ 9,006 $ 9,382 $ 7,160 $ 6,756 $122,501 $167,784 $165,612
Average rate 9.9% 5.9% 8.1% 8.4% 8.3% 7.6% 7.4%
Non-residential mortgage loans
Fixed rate
Amount $21,354 $ 1,537 $ 2,554 $ 2,078 $ 1,886 $ 4,044 $ 33,453 $ 23,094
Average rate 9.4% 8.8% 9.1% 8.9% 8.9% 8.1% 9.1%
Adjustable rate
Amount $ 6,118 $ 2,425 $ 1,378 $ 2,088 $ 2,090 $ 13,195 $ 27,294 $ 32,328
Average rate 15.3% 7.5% 7.5% 7.5% 7.5% 7.5% 9.3%
All Other Loans
Amount $ 2,355 $ 462 $ 404 $ 223 $ 196 $ 1,059 $ 4,699 $ 5,939
Average rate 8.0% 9.5% 8.7% 7.7% 7.5% 6.3% 7.7%
Mortgage-backed securities
Amount $18,131 $13,202 $ 6,473 $ 1,350 $ 912 $ 5,195 $ 45,263 $ 45,182
Average rate 7.6% 7.1% 7.3% 7.4% 7.5% 5.2% 7.1%
Investment securities (a)
Amount $12,001 $ 5,513 $ 2,000 $ -- $ 996 $ 2,100 $ 22,610 $ 23,487
Average rate 7.2% 6.6% 5.4% -- 6.8% 6.2% 5.8%
-------------------------------------------------------------------------------------
Total interest-sensitive
assets $77,871 $37,233 $26,125 $15,432 $15,278 $177,658 $349,597 $348,547
=====================================================================================
Interest-sensitive liabilities
NOW accounts (b)
Amount $ 6,791 -- -- -- -- $ 20,372 $ 27,163 $ 27,163
Average rate 1.2% -- -- -- -- 1.2% 1.2%
Regular, club, and 90-day
notice accounts (b)
Amount $14,702 -- -- -- -- $ 43,769 $ 58,471 $ 58,471
Average rate 2.5% -- -- -- -- 2.5% 2.5%
Money market deposit accounts
Amount $22,317 -- -- -- -- -- $ 22,317 $ 22,317
Average rate 2.9% -- -- -- -- -- 2.9%
Time deposits
Amount $102,521 $38,895 $8,492 $2,522 $1,236 -- $153,666 $153,848
Average rate 5.8% 5.9% 6.1% 6.1% 5.9% -- 5.9%
Advances from FHLB of
Boston
Amount $ 26,000 $ 2,000 $1,000 $4,000 $12,000 $ 14,000 $ 59,000 $ 58,177
Average rate 5.6% 6.0% 6.3% 6.6% 5.4% 5.0% 5.5%
-------------------------------------------------------------------------------------
Total interest-sensitive
liabilities $172,331 $40,895 $9,492 $ 6,522 $13,236 $ 78,141 $320,617 $319,976
=====================================================================================
<FN>
(a) Equities, as well as stock in FHLB of Boston and The Co-operative Central Bank Reserve Fund amounting to
approximately $9,726,000 have not been included in this table.
(b) Although NOW and regular accounts are subject to immediate withdrawal and repricing, management considers
these accounts to have significantly longer effective maturities and repricing terms; therefore, the majority
of such accounts have been included in the "Thereafter" category.
</FN>
</TABLE>
<PAGE>
<PAGE>
FORWARD-LOOKING STATEMENTS
- --------------------------
This report includes forward-looking statements that involve
inherent risks and uncertainties. A number of important
factors could cause actual results to differ materially from
those in the forward-looking statements. Those factors
include the economic environment, competition, products and
pricing in geographic and business areas in which the Company
operates, prevailing interest rates, changes in government
regulations and policies affecting financial services
companies, and credit quality and credit risk management.
Central Bancorp, Inc. undertakes no obligation to release
revisions to these forward-looking statements or reflect
events or circumstances after the date of this report.<PAGE>
<PAGE>
Part II. Other Information
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
Not Applicable
Item 3. Defaults upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
At a Special Meeting of Stockholders of Central
Bank, held on November 19, 1998, stockholders
voted affirmatively on the following proposal:
1) To approve the reorganization of the Bank into
the holding company form of ownership by
approving a Plan of Reorganization and
Acquisition by which the Bank will become a
wholly-owned subsidiary of a newly formed,
Massachusetts-chartered corporation, Central
Bancorp, Inc. (the "Holding Company"), and each
outstanding share of Bank common stock (other
than shares held by stockholders who properly
exercise dissenters' rights of appraisal, if any)
will automatically be converted into one share of
Holding Company Common Stock.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27- Financial Data Schedule
(b) Reports on Form 8-K
None<PAGE>
<PAGE>
CENTRAL BANCORP, INC. AND SUBSIDIARIES
Signatures
Pursuant to the requirements of the Securities Exchange Act of
1934, the Bank has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized
CENTRAL CO-OPERATIVE BANK AND SUBSIDIARY
2/11/98 /s/ John D. Doherty
- --------- --------------------------------
Date John D. Doherty
President and Chief Executive Officer
2/11/98 S/ Paul S. Feeley
- --------- --------------------------------
Date Paul S. Feeley
Senior Vice President and Treasurer
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> DEC-31-1998
<CASH> 4,247
<INT-BEARING-DEPOSITS> 177
<FED-FUNDS-SOLD> 24,934
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 33,396
<INVESTMENTS-CARRYING> 57,931
<INVESTMENTS-MARKET> 58,330
<LOANS> 285,292
<ALLOWANCE> 2,946
<TOTAL-ASSETS> 371,324
<DEPOSITS> 272,416
<SHORT-TERM> 0
<LIABILITIES-OTHER> 3,756
<LONG-TERM> 57,000
<COMMON> 1,967
0
0
<OTHER-SE> 36,185
<TOTAL-LIABILITIES-AND-EQUITY> 38,152
<INTEREST-LOAN> 16,458
<INTEREST-INVEST> 3,373
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 19,831
<INTEREST-DEPOSIT> 8,352
<INTEREST-EXPENSE> 10,870
<INTEREST-INCOME-NET> 8,961
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 361
<EXPENSE-OTHER> 6,652
<INCOME-PRETAX> 3,186
<INCOME-PRE-EXTRAORDINARY> 3,186
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,906
<EPS-PRIMARY> 0.98
<EPS-DILUTED> 0.98
<YIELD-ACTUAL> 2.95
<LOANS-NON> 110
<LOANS-PAST> 0
<LOANS-TROUBLED> 1,291
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,886
<CHARGE-OFFS> 10
<RECOVERIES> 70
<ALLOWANCE-CLOSE> 2,946
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
